American Geological Institute

Government Affairs Program

Government Affairs Report: New Rules for Activities on the Outer Continental Shelf (2/98)

The following column by GAP Senior Advisor John Dragonetti is reprinted from the February 1998 issue of The Professional Geologist, a publication of the American Institute of Professional Geologi
sts. It is reprinted with permission.

The Department of the Interior's Minerals Management Service (MMS) delivered a Christmas Eve present in the form of a revised rule affecting all those involved in the collection or processing of geological and geophysical (G&G) data from the Outer
Continental Shelf (OCS). The rule pertains specifically to the exploration for oil, gas, and sulphur. Prospecting for other minerals on the OCS is governed by separate regulations administered by MMS.

Federal control of the submerged lands of the OCS initiated with the Outer Continental Shelf Lands Act of August 7, 1953. Prior to the creation of MMS, regulation of exploration activities on the OCS was the responsibility of the U.S. Geological Survey
's Conservation Division. While there have been several amendments to the original OCS Lands Act, perhaps the most significant influences have been the numerous subsequent laws affecting both industry and the federal government such as the Coastal Zone Ma
nagement Act, the National Environmental Policy Act, the Regulatory Flexibility Act, the Paperwork Reduction Act, and a host of published regulations.

MMS has stated that access to G&G data and information is essential to insure that the federal government secures fair market value for tracts leased for the exploration for oil, gas and sulphur on the OCS. Securing fair market value for the public
's mineral resources has been a vexing problem for industry, the government and the general public for nearly two centuries. Congress first grappled with the problem of mineral sales from public lands in March 1807 when it authorized the leasing of lead m
ines. Over the years governmental agencies have devised methods for mineral classification, resource evaluation, competitive leasing, rentals, and royalty rates to assure that the public receives proper compensation for its mineral estate. However, the re
vised rule is also an attempt to take advantage of industry expertise and technological advances especially in areas of complex geology, to conduct necessary analyses and assessments for royalty relief and other purposes, and to assure safe use and enviro
nmental protection of the OCS.

MMS contends that it was being denied necessary information by third parties who had obtained and manipulated data collected by permittees, despite the agency's right to acquire such information originally granted by Title 30 of the Code of Federal Reg
ulations which became effective on June 11, 1976, and recently revised by MMS. There were also reported instances, and countless suspected cases, of unauthorized G&G explorations for commercial purposes by persons associated with academic institution
s. In addition to the most pressing objectives for the new rule, MMS also wished to enumerate procedures for the protection of archeological resources, and to standardize definitions. Preservation of significant archeological resources is controlled by th
e criteria cited in the National Register of Historic Places and consists of material remains of human life or activities 50 years old or older and of archeological interest. It should be noted that many in the archeological community object to the use of
the term resource to describe human remains or cultural artifacts which are to be preserved and studied rather than consumed.

Industry concerns primarily centered around the confidentiality of very sensitive data and the risk of highly competitive and costly data being released in the public arena. They further asserted that the new rule would have an adverse effect on the oi
l and gas industry and geophysical service companies and theorized that existing licensing agreements might become invalid resulting in expensive and time-consuming renegotiation of thousands of such contracts, which would stall continued development of t
he OCS.

The revised rule defines geological exploration as any investigation utilizing geological or geochemical techniques for the purpose of producing the subject materials, and expressly includes core and test drilling, well logging, and bottom sampling. Ge
ophysical exploration is interpreted as those activities consisting of gravity, magnetic, seismic or other techniques used to detect mineral occurrences.

Those interested in conducting G&G research for minerals in the OCS must either obtain an MMS-approved permit or file a Notice. A Notice is a written statement of intent to conduct geological or geophysical scientific research related to oil, gas,
and sulphur in the OCS other than that authorized by a permit. Although the Notice does not require the data or information acquired to be submitted to the MMS, the information from such scientific research must be published and made available to the gene
ral public. While all G&G exploration and certain scientific research requires a permit, G&G solely for scientific research can be performed under a Notice unless it involves the use of explosives, the drilling of a deep stratigraphic test, or dev
eloping data or information for proprietary use or sale; then a permit is required.

The revised rule in its final form became effective on January 23, 1998 and represents an 11-month evolution following intense debate engaging the Independent Petroleum Association of America, the Independent Association of Geophysical Contractors, Sen
ator Kay Bailey Hutchinson (Republican-Texas), Senator John Breaux (Democrat-Louisiana), MMS, and other interested parties. Senator Breaux has been involved in OCS issues since 1973, when as a Representative, he introduced legislation which became Public
Law 93-627 in January 1975. That law, known as the Deepwater Port Act of 1974, amended certain portions of the OCS Lands Act.

The storm of protest over the proposed new rule issued in February, 1997 caused MMS to extend the Federal Register comment period twice during 1997 and to conduct special meetings with concerned industry representatives. In addition, MMS has evaluated
22 sets of written comments and recommendations from industry associations, those holding G&G permits, and third party users of G&G data. The federal agency has declared its adoption of only those recommendations considered to be in the public's b
est interests.

After the revised rules take effect and operations are conducted under the modified regulations; MMS intends to schedule a meeting, most likely within the Gulf of Mexico region, to address any implementation problems.

The Government Affairs Column is a bimonthly feature written by John Dragonetti. John Dragonetti is the Senior Advisor the American Geological Institute's Government Affairs Program.

This article is reprinted with permission from The Professional Geologist, published by the American Institute of Professional Geologists. AGI gratefully acknowledges that permission.